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What do you expect your yearly expense to equal?

76K views 183 replies 49 participants last post by  Canadafan 
#1 · (Edited)
When you retire(d), what do you expect your monthly/annual expenses to equate to?
 
#4 ·
No exact numbers but it goes pretty quickly and we really don't keep detailed records. It is something along the following lines:
Ppty taxes 2500.
Ski condo taxes 800
ski condo strata fees 2500.
truck ins 1200.
car ins 1200.
Ski passes 800.
Xmas gifts 1500.
birthday gifts 1500.
Gas 6000.
house ins 800
heating & A/C 2500.
trailer, util trailer, & ATV ins 500.
regular home improvements 3000. (hedge pruning -700., appliance replacement -1000, new BBQ, new patio set, new roto tiller, computer, plants, riding mower, etc.
vehicle maintenance 1000.
food 7000. a real guess
entertainment 3000. a real guess
gym & sports 2500. indoor tennis club & gym
travel 6000. also do occasional larger trips costing 10/15,000 not included
clothing 1500. dress shoes, court shoes, hikers, etc are pricey
ski and racquet equipment 1000.
health related 2500. mostly physio and massage (sports related)-also eyeglasses & prescriptions
TV, phone, internet, cell 2400.
water (tolls & imp. levy) 1000.
personal expenses 1500. (wifes haircut at 90. every 5 weeks is the main culprit)
TOTAL (I think) 54,200.

I know what I spend but not exactly sure of all the details but the above seemed to work out pretty close. Not included is the 3700. PA I receive from condo rent which pays for the strata fees and taxes and this money just goes into the pot as well. Since retiring at age 56 our fixed expenses have pretty well remained the same but we have spent considerably more on travel including a number of quite extensive trips which are not included above. Also helped our children and had some major home improvements including a new deck (10,000), new heat pump and furnace (12,000.), new roof (12000.), new eves (2500.) all in one year which is not reflected. There is always something.
Also, we live an active lifestyle with both of us heavily involved in racquet sports (I compete nationally), ski, hunt, fish, hike, garden, etc. None of these are cheap and someday, say by age 75 or so, they will start to wind down. Every year we have a somewhat extraordinary expense of around $20,000. which is not accounted for. Examples over the past 5 yrs or so are weddings x 2 at 20,000. each, home improvements of 40,000. as mentioned above, trip to Africa (10,000), 5 weeks in Turkey & Jordan $15,000, new car $30,000., new kitchen appliances ($6,000.). Will need a new truck next. Also, we have a larger home 2100 sq ft on each of 2 levels and a large .70 acre lot which is fully landscaped. I guess these will be downsized sometime in the future. Would also like to help the kids paydown their mortgages one day - time will tell.
As you can see, we have lots of discretionary expenditures but as long as we enjoy them and can afford them we will continue along our present path. Its all a matter of choices and `how you want to live your life`.
You should probably just PM me if clarification is required.
 
#5 · (Edited)
Our burn rate is $6K per month after tax. This also covers travel. This has proven to be accurate over 3 years.

Each month I add up all the bank charges, which includes all credit card payments. We do not bother with categorizing the amounts. It may change if we decide to buy a condo instead of renting.
 
#6 ·
At your age its more wise to figure out how you are going to get the income you need rather than how much you will need.

You can count on CPP and OAS providing a steady of diet of cat food in the future so don't even put those in your calculations.

Rumor is that the TFSA limit will double next year. If it does, do whatever you can to get the $70k to put in there and then invest it and drip it and you will have your retirement at 50 with $50k annual income untaxed. Thats the most assured way to get where you want.
 
#7 ·
Edgar, this is hard to quantify since everyone is different and has different priorities and values. What might be reasonable spending to me would be way too high for you or vice versa.
Having said that, in full retirement mode - after downsizing (which means no mortgage), also means no car payment (haven't had that for years) and no debt payments (also not for years), I'm counting on my base costs to be around $24-30k/year. In my opinion, everything above basic living expenses comes down to value choices and so variable based on the individual. You can get a rough idea of base expenses by looking at the statscan survey of expenses where you see that the average person runs around $14k in housing costs and about the same in transportation. Get your house and car paid off and you're looking at a savings of about $20k or so in retirement.

My spreadsheet includes travel at a percentage increase annually of 10%, housing, food and other at 2% which is consistent with my experience in the last 5 years that I've been tracking. Some time in your 50's (I'm not there yet, but close enough), you realize that holy smokes, you will never see Machu Picchu - the Parthenon - the Louvre - unless you do it soon. These are the things that can blow any budget.
 
#8 ·
So, I am a LONG LONG LONG way from retirement ... One of the things that I've been weighing out consistently is how much passive income on a monthly/yearly basis I would need to maintain a comfortable standard of living ...
Short story ... I suggest you start tracking your expenses, not to the penny, but within reason and continue to do so to determine a monthly/yearly amount. It's not that difficult to figure out what might change going forward. That's how I determined the income I'd require to retire financially independent (including what I/we would require if my wife retired early). Things changed, new career, I/we continued working beyond that minimum requirement ... more savings for me/us :encouragement:
 
#9 ·
As others have already said, there is no good way to estimate based on what others spend. It's best to track your own lifestyle expenses over the years, at least get a good estimate, and then think of what else you want to do in retirement vs your current lifestyle.
 
#11 ·
I appreciate all the feedback pertaining to me, but honestly, I created this thread out of the interest of wanting to see what other CMFers are projecting. I understand that my projected expenses may greatly differ from someone elses based on the standard of living I want, how much I want to travel, where I want to retire, etc. It's probably my fault for posting a big into paragraph about myself :p.
 
#12 ·
We have been tracking our expenses for three years, and we spend about $3000/month after tax. This however does not include medical/dental which is currently covered with my hubby's job. that will add, on the high end, about $250/month.
This also does not include our December holiday (but does include quick visits to the island to see the outlaws and other road trips) which comes in at about $5-$6 thousand.
Our plan is to spend at least $10 thousand a year, likely more while we are young, travelling.
Happily pensions will cover our living expenses, so all the money we have saved and invested is our travel and happy money...
Could retire yesterday but I think hubs just got a new job...silly boy. I work part time and that pays for the holidays right now. Great job that feels like fun and not work, and I can have it as long as I want.

summary: after work our everday expenses will be about $3500 (this should include anything we could have missed over our years of tracking)
Travel , let's say $15,000/year , so another $1250/month

$4750/month...will round that to $5000 just because.
 
#13 · (Edited)
Most people, if they have the resources to do so, would likely spend as much in retirement (or more) than they did while working their last 10 years. By the time a couple are empty nesters, they will have gotten rid of mortgage payments and will have started to travel (if that is their thing to do). Once retired, they have more time to spend on more travel, or recreational/hobby things.

Last year was a bit expensive for us, furnishing a new (to us) house in a new location and purchasing one new vehicle. If I strip some of that out, our average expenditures including taxes was about $110k and it looks like it will be about the same this year. That includes circa $30k of travel (2 significant trips a year). I think it is pretty easy for an average middle class couple to spend circa $80k per year (all inclusive).

Added: To put this in context, I have been retired 8 years and spouse 1.5 years.
 
#14 · (Edited)
I recently had done a monthly budget. Total basics comes to $3,756 per month. That's with two Universtiy kids at home. The numbers are based on actual monthly bills for Hydro, gas, water, taxes, insurance, TV, Internet so very accurate. Winnipeg winters and exorbitant property taxes are a factor.

These are the basics for us so does not include trips which we take at least once per year somewhere warm for one week. And does not include extras for kids. But I think it's a good start for retirement budgeting. Think I missed anything?

Hydro & Gas 173
Water 60
House Taxes 348
House/Cottage Insurance 155
Cottage Lease 67
Car Ins (2 cars) 239
Car Gas 250
Groceries 800
Eat Out 200
Dental/Prescr/Glasses 300
Jets/Bombers 200
Beer 30
Clothes 200
Sat TV 100
Internet 40
Cell Plans 80
Home Phone 40
Hair Doo 75
Gifts 100
Keep the wife happy/ slush fund 200
fix house/cottage 100
Total Basics 3,756
 
#16 · (Edited)
Our average for the past 6 years was around $35K.......last year being around $40K (which included 2 'stand alone' weeks in Europe last year, plus 2 transatlantic cruises).......this year, (with ~2 weeks in Europe done already and with a pending 4 week+ Northern European/transatlantic cruise factored in), is estimated to be our most expensive yet...about $50K.
 
#17 ·
Wow...all that travel and only $40-$50k?

I've estimated in today's dollars, we'll need $54,000 to retire on after-taxes per year. Retirement is another 15+ years away and that would be in our mid-50s. I think that would be a great time to call it quits. We'll see. We need at least 1) $1 M in the bank in assets and 2) a paid-off home with zero consumer debts to make that happen.
 
#23 · (Edited)
Wow...all that travel and only $40-$50k?
It's not where you travel, but how you travel........we don't care for hotels, so we rent cheap studios/rooms with kitchen facilities through sites such as HouseTrip & Wimdu, often in 'non-touristy' sections; we're not 'restaurant people' and prefer preparing our own meals, (which gives us exposure to local markets)........we like to amble around cities and look at neighborhoods and the exteriors of old buildings, (we avoid 'entry fees' whenever possible).......sometimes we'll buy a transit pass and ride around, getting off and on, and checking out various areas.

On the cruises, (and my wife just checked the latest price for the transatlantic repositioning section of our next trip.....they're now asking twice what we paid), we get the cheapest cabin, (it's only used for sleeping anyhow).

We don't pay extra to frequent the 'speciality' restaurants, don't use the (expensive) spa, don't drink, (we used to have wine with dinner but some time last year my wife went through a period of unexplained heartburn, so in an attempt to isolate the possible cause we cut out certain things.......after a couple dry weeks we both said that we couldn't care less if we drank again.......the only one we've had in ages was one glass aboard ship on her birthday last October).....which brings us to the offered 'specials' aboard...$50US per day, per person, for 'unlimited drinks'.......we don't piss money away at the casinos (I'd hazard a guess that winners, such as Marina, are few and far between)......we figure there are people who travel on the same ships, visit the same ports, see the same oceans/seas that we do, and we'll bet they end up paying ten times what we spend.

Bottom line...we spend less and travel more....without feeling at all deprived.


Edited to add: My wife is currently checking out CruiseCritic, (a CMF type site for cruisers), and noted that someone paid $170US for a massage......(perhaps it was Al Gore?)
 
#18 ·
It appears some are not including income taxes in their spending projections. While I agree that is not really a 'budget' factor while one is working since everyone will be saving at different rates, e.g. 10-50% and therefore marginal tax rates will vary widely, income taxes is a necessary spend during withdrawal stage and should factor in one's retirement projections. However you project it, e.g. 4% SWR or otherwise, projecting the amount of income tax is not that hard to do. Simply fo a 'what if' with your tax software with some kind of balance of pension income (DB, DC, CPP, OAS), eligible dividends and cap gains.
 
#19 ·
We are currently spending anywhere from $2000 to $3000 per month - I think $2500 is a good estimate of our monthly spending. Our monthly income is around $14000 (dual incomes + dividends), so we are saving in excess of 80% of our income right now. We are obviously living well below our means, the purpose of which is to build up our assets quickly so that I can retire ASAP.

I hope by the time we are both retired that we will be able to loosen the purse strings somewhat - although at our current spending level we enjoy our lifestyle. At some point we will be building a cottage, so that will force us to spend some of our money. I can't envision a scenario in which we could ever spend 50k per year - perhaps if the travel bug ever bites us - but for now, annual trips to the Baja are enough for us... and we can do it on the cheap. :)

We are currently trying to decide how long my wife wants to continue to work - she says 10 years, I'm lobbying for 5.
 
#20 ·
Our expenses we estimate with keeping a home in newfoundland and Ontario and renting somewhere 3-4 months in winter is $83,000 AFTER TAX per year.We are renovating the newfoundland house now so it will be practically new and our Ontario house is only 4 years old. We budgeted 10k a year for maintenance on the homes on top of the normal property tax ,utilities. There is also $10,000 in there for vacations and a new car purchase every 6 years. We are practically retired now with exception of my husband working one day a week which generates about $13000 a year and we have our rental incomes and dividend income. We are earning much more than that now and next year once our daughter is done school we plan to put that budget to the test.
 
#22 ·
Our budget has been running between $85k and $95K for the past 10 years. That includes a rental penthouse that accounts for $43k so I guess we could net that out to $42k to $52k including an annual trip to Europe for a month (or Florida in the early years). Life is good and we can live forever!
 
#24 · (Edited)
We travel frequently. There are many ways to reduce your cost of travel and still travel in the fashion that you prefer. We usually combine cruises with land trips and inevitably book them in the final payment window when prices are slashed. The trick is to be flexible. When our South American cruise was cancelled last December, we had a Thai trip booked within two weeks and left 10 days later. It was not in the plans rather it was on my bucket list and great airfare came on the screen! Liked it so much we are going back again after Christmas. But it was winter in Calgary.....we had a great deal of incentive. We also book some things on UK travel sites. Prices can be lower but you usually need an accommodation address if the package includes air.
 
#25 · (Edited)
This is an interesting thread for me as I retired 2 weeks ago, a few days after my 55th birthday. My wife has been retired for a couple of years.

Our "planned" budget is approx $72K after tax, based on a conservative real return of 1% on investments. If we are able to do another 1-2% on that it will have a nice impact on our lifestyle. We're fairly thrifty but hope to do a fair bit more traveling and eating out etc, than we have done in the last 10 years or so, when our financial situation changed a lot. Our normal expenses over the past couple of years are about $2500/month before considering any travel beyond a few overnight trips, car replacements, major house repairs etc. However, we have just spent a considerable amount completely renovating, refurnishing and putting an addition on to our home where we plan to live for approx 20 years, as our health allows.

I'm liking what I'm reading so far on retired peoples lifestyles and expenses, especially all the parts about last minute travel, combining cruise and land etc. That's definitely our style.

Best wishes to all who are there now and those working towards a good retirement.
 
#28 ·
Having less money than others on this forum I expect my retirement to look different than theirs. I'll be retiring within the next few months and expect to live on a net amount of $37,000/year indexed to inflation. According to my budget, this amount will cover my basic living expenses as well as a nice trip yearly. Thankfully I enjoy free activities such as walking and don't need expensive activities to be happy.
 
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